UK economy grew much faster than expected in May

UK gross domestic product increased by 0.4% month on month in May, after a 0.2% rise in April and beat forecast for 0.2% monthly increase.

The Bank of England expected the economy would grow by 0.5% over the second quarter – something that now looks likely to prove too low.

Annualized GDP was up 1.4% in May, compared to 0.7% growth previous month and overshot consensus for 1.2% rise.

Faster than expected Britain’s economic growth in May, boosted optimism, but also provided tailwinds for the new government of PM Starmer,

On the other hand, better than expected numbers raise a question mark over the possibility that the Bank of England will cut interest rate next month, as bets for a rate cut dropped below 50%.

Stronger than expected increase in economic output in May was driven by growth in all three key sectors – services, manufacturing and construction, adding support for the new Labour administration, which has set itself the aim of achieving the fastest growth among the Group of Seven advanced economies on a sustained basis.